Business

5:28 pm

Wed March 14, 2012

The Fine Print on Austin’s $8.6 Million Deal with Apple

The Austin Apple Store at the Domain. Should they accept the city and state's offer, Apple will drastically expand their Northwest Austin operations.

Photo courtesy flickr.com/tomask

Last week, Gov. Rick Perry’s announced a $21 million economic development agreement with computing-giant Apple. The company is considering a major expansion of its Austin campus, potentially creating up to 3,600 new jobs and investing hundreds of millions of dollars.

This Thursday, the Austin City Council is set to receive a briefing on an economic development deal with Apple. But the contract the city is considering is completely different from the governor’s proposal.

Confused? Don’t worry. We've sorted out the details.

First of all, what is Apple proposing for Austin?

According to the Business Information Form on file with the city, Apple needs an operations center to handle internal and financial functions:

Apple is planning for its Americas Operations Center, which would be the operational center of the company for the Americas region outside the company’s global offices in Cupertino. The company requires an operational center to centralize various functions such as accounting, human resources and finance. Apple anticipates a campus to house anywhere from 2,000 to 3,6000 employees over the next 7 to 10 years …

Phase I of the project will include the new construction of a two-building campus off of Parmer at Riata Vista totaling approximately 200KSF (or 200,000 square feet). Phase II of project would be to construct up to an additional 800 KSF of new office space, for a total campus size of approximately 1MSF (one million square feet).

Apple is required to invest $305.5 million in campus construction and goods over the 10 year span of the contract.

The description notes Apple is “also considering Phoenix as an alternative location.” Should Apple come to Austin, Phase I construction will begin June 2012.

But what about jobs? The economic development agreement before the council states that “In addition to retaining 3,100 existing full-time jobs … Apple shall create at least 3,635 new full-time jobs” in 10 years.

The expected average wage for the lowest paid 10 percent of local workers is projected at $35,000. The city’s evaluation matrix adds that “the average wage paid across all positions is $63,950, well above the Travis County average annual wage of $52,100,” and that the median wage is $52,000 “and is distributed as follows: 20 executive positions at $211,000, 250 manager positions at $114,000, 165 supervisor positions at $64,000, 850 staff positions at $83,000 and 2,350 entry level positions at $40,000.”

So what is the city proposing? In addition to the $21 million promised to Apple from Gov. Perry’s Texas Enterprise Fund, the city would completely refund Apple’s property taxes on buildings, machinery and equipment for 10 years.

“All the new taxes that they pay in, they would actually get a grant back to them, equal to the amount that they pay,” says Brian Gildea with the city’s Economic Growth and Redevelopment Office.

(If Phase II of Apple’s construction doesn’t take place by year seven of the contract, but they meet their employment goals, Apple’s property tax rebate would fall from 100 percent to 80 percent.)

The city values this “performance-based grant investment” at $8.6 million over a decade. But that’s more of an estimate, says Gildea.

“What we can’t say for certain are a couple of things. One, we don’t know exactly what the building’s assessed value will be. And two, we don’t know what future tax rates will be. So that’s an estimate based on current figures we have," he said.